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Dismissals are Increasing in the District of New Jersey Under Spokeo

Two recent District of New Jersey decisions have resulted in the dismissal of consumer protection based suits based upon lack of standing.

On January 4, 2017, District Judge Brian Martinotti dismissed a putative class action alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq.(FDCPA) in Beneli v. AFNI Inc. There, the plaintiff claimed that a debt collector improperly attempted to pass on a convenience fee for consumers that made payments on the defaulted debts by credit card in violation of the FDCPA. Benali v. AFNI, Inc., Civ. No. 15-3605, 2017 U.S. Dist. LEXIS 783 (D.N.J. Jan. 4, 2017). The defendant ultimately moved for summary judgment, citing to the Supreme Court ruling in Spokeo v. Robins,  136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016), arguing that the named plaintiff, did not have standing because he had not been charged any convenience fee. After discussing the impact of Spokeo, Judge Martinotti held: "In sum, Plaintiff admits he never suffered any actual harm as a result of Defendant's alleged FDCPA violations, and the alleged risk of harm to the Plaintiff in this case is entirely conjectural or hypothetical. Because Plaintiff has not suffered an injury-in-fact he lacks Article III standing and this case must be dismissed accordingly for lack of subject matter jurisdiction." Benali v.2017 U.S. Dist. LEXIS 783 *17 (D.N.J. Jan. 4, 2017).

On January 24, 2017, District Judge Kevin McNulty dismissed a putative class action filed as part of a multi-district litigation involving claims under the Fair Credit Reporting Act, 15 U.S.C. 1681, et seq. (FCRA) in In Re: Michaels Stores, Inc., Fair Credit Reporting Act (FCRA) Litigation, Civ Nos. 14-7563. There, the plaintiffs were employees of Michaels Stores, Inc., that claimed the defendants violated the FCRA through a deficient disclosure regarding background checks. Specifically, the FCRA requires that an employer provide a specific disclosure to employees advising that it intends to obtain or conduct background checks of its employees. The FCRA provides specific requirements as to how this disclosure must be presented - namely, it must be provided as an independent document. Michaels Stores is alleged to have made the disclosure within its employment application, as opposed to using a stand-alone document. Judge McNulty dismissed the Complaint, without prejudice, holding: "In light of Spokeo, bare procedural violations of the FCRA, such as the violation of the stand-alone requirement alleged here, do not constitute an injury-in-fact. For the reasons expressed herein, I join the ranks of the courts that have so held." In re Michaels Stores, 2017 U.S. Dist. LEXIS 9310 *12 (D.N.J. 2017).

The foregoing decisions reflect a growing trend among lower courts following the Supreme Court's 2016 ruling in Spokeo. For those concerned with and subject to various federal consumer protection laws such as the FDCPA and FCRA, the trend serves as good news and will help to curb individual and putative class action suits predicated solely upon technical statutory violations.

  • Partner

    Andrew Sayles defends financial institutions and their service partners in complex litigation and class actions, with a particular emphasis on issues related to consumer financial services regulation. He also advises clients in ...

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